Traders on the floor of the New York Stock Exchange, January 3, 2023.
Source: NYSE
The Dow Jones Industrial Average fell on Tuesday as investors struggled to continue building momentum in early 2023 and weighed on recent earnings results.
The blue-chip index lost 379 points, or 1.1%, affected by a drop in Goldman Sachs shares. The S&P 500 and Nasdaq Composite Indexes fell about 0.3%.
Goldman Sachs fell about 7 percent after the bank announced this You miss the worst earnings in a decade for the fourth quarter. Its results were pressured by a decline in investment banking and asset management revenues. Meanwhile, rival Morgan Stanley posted better-than-expected numbers, thanks in part to record wealth management returns. Its shares jumped 6%.
These results came after other major banks such as JPMorgan and Citigroup reported mixed quarterly results.
About 7% of the S&P 500 reported earnings as of Tuesday, according to FactSet. 70% of those companies exceeded expectations. United Airlines will report its quarterly results after the bell.
Wall Street is coming off a positive streak of weeks to start the new year, but investors may have entered a hall of mirrors, according to Mike Wilson, senior US equity analyst at Morgan Stanley.
“The rally this year has been led by low-quality stocks and massive short selling. However, it has also seen a stronger move in cyclical stocks compared to defensive stocks. This move in particular convinces investors that they are missing out on something and should reposition,” Wilson said.
He added, “Truth be told, it was a strong turnaround, but we also realize that bear markets have a way of fooling everyone before they end.” “We are not playing on this fake head/bear market because our business and process are convincingly bearish, and we trust it.”
The Dow Jones Industrial Average since the beginning of the year
Year-to-date, the Nasdaq Composite is leading the way up, up 5.9%, as investors bought surging technology stocks amid rising hopes of an improving growth stock landscape. The S&P 500 and Dow have advanced about 4% and 2%, respectively, since the start of the year.
The gains were made on the back of the first set of inflation-related data that investors saw as pointing to a contraction in the economy, with hopes that it would give the Federal Reserve an excuse to slow rate hikes again. Last week, the Consumer Price Index for December showed that prices had eased by 0.1% from the previous month, but prices were still 6.5% higher than the same month a year ago.
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